Luke Visconti’s Ask the White Guy column is a top draw on Fair360.com. Visconti, the founder and CEO of Fair360, formerly DiversityInc, is a nationally recognized leader in diversity management. In his popular column, readers who ask Visconti tough questions about race/culture, religion, gender, sexual orientation, disability and age can expect smart, direct and disarmingly frank answers.
Question:
What would make white people support a black business over a white business, all things being equal
Answer:
I’ll assume that your question involves a hypothetical company, one which is average, and, therefore, does not have a robust supplier-diversity program. I’ll also make the assumption that the procurement department head and/or CEO is white.
With all things being equal, and with the above circumstances, there are several reasons for a white businessperson to decide to do business with a black-owned business over a white-owned business (per your question). It’s called “supplier diversity.” Supplier diversity is not charity. It is a process by which companies improve their business. Properly implemented, supplier diversity lowers costs and increases margin and/or revenue.
There are several ways this happens:
- If you increase the number of suppliers with which you’re doing business, you will lower overall procurement costs.
- Women/minority business enterprises (W/MBEs) are forming and growing at a much faster rate than business in general. Aligning your business with a growth sector is a good strategy.
- If your company is a consumer company, supplier diversity will help your company brand new consumers (your suppliers and their employees). In the process of doing business, your company will learn the skills necessary to better form relationships with people of color and/or women.
- If your company is a business-to-business company, you probably already know that other progressive businesses are asking for supplier-diversity numbers on RFPs. You are at a competitive disadvantage if you do not have a good record to show.
- If your company is a business-to-government company, you already know that supplier diversity is a mandate. Beyond mandates, however, is intent. Progressive governmental agencies (they’re not all the same) are looking for exceptional performance. The late Dave Sampson at Marriott told us of three $1-billion contracts they won from three different city governments on the basis of superior supplier diversity.
- There is ample anecdotal evidence that shows that broadening your supplier base to include W/MBEs decreases costs AND increases innovation.
- Supplier diversity can increase the economic sustainability of a local economy by broadening and strengthening the economic base of the region. This is most quickly done by working with people who have formerly been excluded and/or oppressed (you get the most gain from an underutilized asset).
- Supplier diversity is a sound business practice, especially practiced by companies that outperform the general stock-market indexes. The 2007 Fair360, formerly DiversityInc Top 50 Companies averaged 9.3 percent of their procurement spend with M/WBEs; we estimate the national spend at 2 percent. The Fair360, formerly DiversityInc Top 50 Companies, expressed as a stock index, outperform the Nasdaq, Dow Jones Industrial Average and the S&P 500 on a long- and short-term basis.
This short list of factors is not inclusive of all the reasons to promote supplier diversity, but it may give cause for you to ponder why supplier diversity isn’t more widespread.
Ultimately, we must all come to grips with the reality that we are visually oriented tribal beings; diversity management–in this case, supplier diversity–isn’t going to come “naturally.” What comes naturally is to do business with people who look just like we do. Diversity management is like managing any other business discipline: Expectations must be clear, accountability must be absolute and vigorous metrics must be utilized.
